Under section 19 the standard deduction is ₹75,000 (or the salary, if less) in the new regime and ₹50,000 in the old regime. Under section 156 (earlier 87A) a resident individual gets a rebate of tax up to ₹60,000 where taxable income under the new regime is up to ₹12 lakh, with marginal relief just above (tax cannot exceed the income above ₹12 lakh), and up to ₹12,500 under the old regime where taxable income is up to ₹5 lakh. So salary up to ₹12,75,000 is tax-free in the new regime.
Worked examples, new regime
| Salary | Taxable (− ₹75,000) | Slab tax | Rebate / relief | Tax + 4% cess |
|---|---|---|---|---|
| ₹12,75,000 | ₹12,00,000 | ₹60,000 | Rebate ₹60,000 | Nil |
| ₹12,85,000 | ₹12,10,000 | ₹61,500 | Relief ₹51,500 (tax capped at ₹10,000) | ₹10,400 |
| ₹13,50,000 | ₹12,75,000 | ₹71,250 | None (₹71,250 < ₹75,000 excess) | ₹74,100 |
Marginal relief stops once the slab tax is less than the income above ₹12 lakh, at roughly ₹12,70,500 of taxable income.
Worked examples, old regime
| Taxable income (below 60) | Slab tax | Rebate | Tax + cess |
|---|---|---|---|
| ₹4,50,000 | ₹10,000 | ₹10,000 | Nil |
| ₹5,00,000 | ₹12,500 | ₹12,500 | Nil |
| ₹5,10,000 | ₹14,500 | None (above ₹5 lakh) | ₹15,080 |
The old regime has no marginal relief on the rebate, so ₹10,000 above ₹5 lakh costs ₹15,080.
Edge cases
- Pensioners get the standard deduction on pension taxed as salary.
- Special-rate income such as some capital gains does not get the new-regime rebate (section 156(3) limits it to tax at section 202(1) rates).
- Non-residents do not get the rebate.
- Professional tax is deductible only in the old regime.
FundRaksha HR applies the right standard deduction and rebate in every TDS run. Try the income tax calculator.
Sources
Last reviewed: 2026-10-21. Information for Indian businesses; not legal advice.